21 Feb What is the future of recurring revenue in your business?
This is a question that that’s been a consistent cause for advisers to reach out to us lately. We’re entering a time where there’s no “passive income” from advice clients anymore. Every dollar you earn must have a corresponding service delivered in return, and that service must deliver value in the eyes of the client, or your recurring revenue will stop.
In future you’ll have, at most, twelve months worth of income from each client if your ongoing services aren’t good enough.
What will this mean to you? The impact will be different in every business.
If you’re not confident that your ongoing service model is structured in a way that will deliver absolute value to every client you sign, make it a priority to reinvigorate it! One client review and a birthday card in the course of a whole year isn’t likely to do the job.
Don’t get me wrong, I’m not talking about adding more meetings. Old-school thinking of segmentation is long gone.
You’ll want to have a baseline service for all clients that will be, in the very least, one Client Review (preferably called a Strategic Update or an On-Track meeting or the like) and some additional proactive calls throughout the year, combined with one-to-many value-adding communications…
Not just a generic newsletter – I’m talking content that will engage, educate and inspire your clients to achieve more from their financial plan and life.
There are loads of great tools that you can use to curate content, and even design your own that is perfectly suited to the different niches you work within. Technology makes it easy to direct the right content to different clients so that each one of them feels like you hand-picked the information at just the right time for them.
You’ll also have additional services that you can build onto this baseline for clients to suit their individual circumstances; additional calls, reports, advice at certain times of the year.
You might even want to go right back to basics and reinvent the way you deliver your Strategic Update (review) meetings. Doing so could give you a great balance of client-experience and efficiency, and take the conversation way beyond how their portfolio has performed in the year.
It won’t even matter if you end up with 30 different service offerings between your clients, because you’ll use technology to help manage it all and ensure you deliver on your promises.
It’s funny – we all used to assume that every client would be an ongoing client and so the biggest question was how to charge for the ongoing service.
Now the first question is if they should/will be an ongoing client; can we add value to this client on retainer, or are they better suited to take advice now and come back to us when they have another need?
That raises all sorts of questions.
For many, the first instinct is that you don’t want transactional clients because the value of an advice business is in recurring income. It’s still a valid question you’ll need to ask yourself in regards to every client, and consider when deciding who you will focus on serving in the future of your business.
While your future recurring revenue will come in the form of 12-month agreements that must be actively renewed each year, it’s a great model to enable you to really make a difference in your clients’ lives.
We have many advisers who have been effectively running this model for years and they’ve never enjoyed their client relationships more – and never been more confident about the future value of their business.
If you’d like to hear more ideas about Reinventing your Business to Thrive in the Future of Advice…and to explore about how Elixir might be able to help you do this, reach out to chat to one of our Consultants.